Yen traders are bracing for more volatility today as the Bank of Japan updates the market on its latest rate decision. Markets expect the bank to hold rates at 0.25%, but many traders believe it will maintain a strong hawkish bias in its forward guidance. USD/JPY has seen significant volatility in recent sessions, with a 350-point range following the Fed’s decision alone. More moves are expected today. A hawkish surprise from the BOJ, especially a rate hike, would likely widen interest rate differentials and apply downside pressure on USD/JPY. However, many traders had predicted this when the Fed raised rates by 50 basis points, and the subsequent 350-point rally hurt bearish positions. If the BOJ’s stance is more dovish or even less hawkish than expected, the pair could swiftly challenge recent highs, risking another stop-loss run for USD shorts.
The pair is currently trading near the middle of its recent range around 142.50, with initial resistance near yesterday’s highs just below 144.00. Initial support is on the hourly chart at the 200-Day Moving Average at 141.82, with stronger support levels further south at Wednesday’s low and the longer-term trendline.
Resistance Levels:
- Resistance 2: 147.20 – September High
- Resistance 1: 143.94 – Weekly High and Trendline Resistance
Support Levels:
- Support 1: 141.82 – 200-Day Moving Average
- Support 2: 139.70 – Trendline Support
